The USD/JPY pair rose to 159.64 last week but has since retreated. The rise from 155.01 is considered the second leg of the corrective pattern from 160.71. While another rise cannot be ruled out, a strong resistance from 160.71 must be seen for a reversal to occur. Given the bearish divergence condition in the 4-hour MACD, a strong breakout of the support at 158.74 would indicate that the rally from 155.01 has already been completed. Intraday bias will return to the downside at 55 D EMA (now at 158.36) and below.
In the bigger picture, for now, the corrective pattern from 161.94 (2024 high) remains completed at 139.87. A rally from there is seen as a resumption of the long-term uptrend. Therefore, a break of 161.94 is expected at a later stage to resume the long-term uptrend. However, a sustained break of the 55 W EMA (now at 154.36) will weaken this view and bring back a deeper decline towards 139.87 to extend the pattern from 161.94.
In the longer term picture, the uptrend from 75.56 (2011 low) is still in progress and may be ready to resume. A strong break at 161.94 would target a 61.8% forecast of 102.58 (2020 low) to 161.94 (2024 high) from 139.87 at 176.55 in the medium term. The long-term outlook will remain bullish as long as the support at 139.87 holds, even in the event of a deep pullback.
